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Ask HN: Does anyone know what's going on at Coinbase?
180 points by joezydeco on March 23, 2013 | hide | past | favorite | 139 comments
Maybe a Coinbase engineer can anonymously tell us what's going on over there, because nobody trying to trade with Coinbase can get a public answer.

Money is going missing. Transactions have been delayed for days and, in some cases, over a week. Even amounts already in BTC aren't leaving the system.

Coinbase claimed the other day this was all due to a database migration[1], but they're offline once again.

[1]: http://support.coinbase.com/customer/portal/articles/1051063-pending-transactions

Fred from Coinbase here.

There are still a few lingering issues, which we've been working hard to fix and will be looking at again today. To those affected, I'm very sorry for the wait. Funds are safe, it's just a question of opening the pipes properly to let them flow normally.

I think you guys will pull through in the end, but your communication is honesty bewildering.

You guys are still:

* Waiting until the last minute (after they've been waiting a week!) to tell people their accounts have been flagged as 'high risk'

* Not updating your blog with problems as they arise

* Being completely untransparent about the obviously-a-lie "24 hour rolling limit".

* Letting emails about people's already confirmed bitcoins being locked into your "wallet" go unanswered.

* Generally being completely opaque about both what is going on, and why people are getting flagged at the last minute.

My recommendation: charge more for your services and fucking hire some people to do some damage control--AND BE TRANSPARENT. It's great that you are in the reddit threads, and now on here.. but for the love of god, you are pissing EVERYONE off. There are people falling over each other to be your "customer support specialist" or whatever you were hiring for the other day; have them do some friggin' support.

Some good reminders for all of us. Case study material, in fact (hopefully it won't turn into a full-blown, "oops, where did all the money go" case study).

Just to chime in with that Fred said, very sorry for the delays. We added a blog post here: http://blog.coinbase.com/post/45976220890/pending-transactio...

Several pieces of the site scaled up about 10x in the past month or two, and this exposed some lingering performance problems. Somebody told us an analogy one time of rebuilding a car while trying to drive it down the freeway at 60MPH. That is a good approximation of what we're doing right now - in short, we are doing so carefully and with the help of great test coverage to make sure nothing breaks along the way.

Thank you your bearing with us. I wish I could say this is the last time we'll experience scaling problems in the next year, but it seems unlikely with the growth of bitcoin right now. If this seems like something interesting to work on, we are also hiring: https://coinbase.com/jobs

We'll post updates to Twitter as we come closer to a resolution. Thank you!

Can you please describe the implementation of this system, and the problems encountered recently, in more detail?

Which database systems are involved in the "database migration" described in the support center article? Please list at least the product names and versions.

What was the nature of the "refactor"? What programming languages and implementations were involved, for instance?

What exactly happened during the "database migration"? Was there any data loss?

What sort of backup infrastructure is in place?

Im a Coinbase customer. I'm waiting for my pending transaction to go through, and for USD to hit my bank account. And I'd rather have Fred and the rest of Coinbase working on solving that problem than explaining what, exactly, the glitch is, and while they're at it, what their entire infrastructure looks like. There will be time for explanations later.

False dichotomy. I'm sure someone in the entire company has five minutes while fixing the problem to explain to us what's going on.

You may be overestimating how many people 'the entire company' is ;)

Judging by the design, two? :P

maybe if enough people get sick of losing real money, we will finally be able to put some regulation around ecomerce sites security, privacy and data protection

i second eof's reply, especially the high risk issue, I "bought" 14 coins at 34.50, emailed support as soon as it flagged and you basically responded with "whoops, I'm Sorry".... Meanwhile I had left the funds in escrow for a week waiting for the order to clear when I could have bought them through another source at a slightly higher rate and still profited in a large way. Then I emailed support again when I found that another customer had posted they had actually had the order forced through by support due to the issue being on Coinbase's end. That was two weeks ago and I still have not received a response as to why the order was covered for another customer but not for me.

Unfortunately you guys hit a Satoshi Perfect Storm time to commence Beta - still, trial by fire, hang in there, lotsa Diet Dr Pepper/red bull!

This is absolutely an issue that needs to be handled immediately. When there is real money involved, trust/faith is by far the most important factor. If there is any concern about missing money, people will lose faith in the service and usually stop using it. To give an analogy, consider what is going on in the minds of the Cypriots while their accounts are in limbo.

If anyone was thinking his transactions with a bitcoin exchange or their bitcoin account with some website was remotely as safe as a bank in Cyprus, we can't really call him a fiscally responsible adult...

This week we've been looking at threats that Cypriot banks would never reopen again, and at a minimum large depositors will lose a quarter of their savings. It seems like you have it backwards!

And the general trend with Bitcoin "banks" is that at some point people lose a bunch of money and the website either shuts down or loses all trust. Your point?

I find your tone disappointingly arrogant, sarcastic, and dismissive, to a level which is not justified by your evident knowledge of the Bitcoin ecosystem.

You may, if you choose, maintain Bitcoin in an account in a Bitcoin trading site, but you can also send it to a Bitcoin address whose private key seed you've memorized ("brainwallet"), maintained on an isolated machine, or printed out on a barcode kept in a safe. While I don't trade Bitcoin, my Bitcoin-enthusiast friends use these approaches.

In short, Bitcoin trading sites do not provide the same service in the Bitcoin ecosystem that banks provide in the fiat-money ecosystem; they are more like Western Union or PayPal, as reflected in the FinCEN's new regulatory guidance this week.

In the future, at least on Hacker News, please attempt to engage in rational discourse like a civilized human instead of a 4chan troll.

I didn't read the comment as a troll or any of what you said about the tone. It seemed to me to be an accurate account of what has happened before: Bitcoin bank/exchange gets hacked or has other issues, and people lose confidence. This is empirical. To deny what 30 seconds of Googling and a review on BitcoinCharts.com confirms speaks to your "evident knowledge of the Bitcoin ecosystem".

You are right that you can store Bitcoins anywhere, and aren't restricted to banks/exchanges. However, this protects only the coins themselves, not the value. As things stand today, Bitcoins are only as valuable as you can trade them for fiat currency, or for products/services that continue to accept fiat currency. Where and how you store them has no impact on what the market is bearing as value for Bitcoins, and faith in the banks/exchanges plays a huge role (though there are other factors as well) in the market value.

How do you interpret "Your point?"?

Bitcoin exchanges provide a very similar role that banks play. They are a place to store money securely* and make sure it's easily available and exchangeable.

Just because you can stick money under a mattress (the equivalent to your memorizing a bar code) has nothing to do with the role of banks or marketplaces.

Bitcoin is supposed to allow you to send money to anyone given the address. The system itself is more like Western Union or PayPal. How are you making the claim that the exchanges are replacing them? That would mean they do nothing on top of the basic idea of Bitcoin.

*Banks and bitcoin marketplaces get robbed, there is an illusion of security to some degree, except banks get things like FDIC insurance.

> [Banks] are a place to store money securely* and make sure it's easily available and exchangeable.

Not at all--what you're thinking of are "wallets." :)

Banks are places we put money to prevent it from losing value. Money kept in a wallet (or under a mattress) steadily loses value because of inflation. A bank counteracts this by loaning out the money we give it (earning it money on interest), and then paying us another, smaller interest rate for our deposits in turn, which will offset inflation to whatever degree. Other entities also do this--mutual funds, for example--but banks do it while also making our money still somewhat convenient to re-liquidate and transfer; others may require, for example, 30 days' notice to facilitate withdrawal.

One thing that's very interesting about Bitcoin is that, once it's all mined out, there won't be any inflation (or deflation) of its supply--the amount of Bitcoin out in the world will become effectively fixed. This means that, by and large, "banks" (in the "savings bank" sense; investment banks are a separate beast) are pretty irrelevant to a Bitcoin-based economy: there's no need to protect the value of your money; it's stable just sitting in a wallet.

This property of Bitcoin might do strange things to the global economy if Bitcoin becomes more widely adopted. In effect, it would be a global version of what some Eurozone countries have experienced, where they have control over their fiscal policy (taxes and spending), but no control over their monetary policy (ability to print money.) It's common wisdom in Economics that at least a little bit of inflation is good--otherwise people tend to hoard money instead of investing it ventures that improve GDP. In a wholly-Bitcoin economy, there's no particular fear-based incentive to invest over just sitting on your money. (There's still a greed-based incentive to invest with banks for increased risk = increased reward in good economic times, but in times of economic volatility, the "flight to quality" toward stable Bitcoins would be absolute, moreso than treasury bills or gold have ever been.)

This is simply spinning the story into the bitcoin manifesto if I ever saw such a thing.

Banks keep money secure. Wallets don't.

You seem to operate entirely in a world where inflation is the only thing that occurs. You ignore the fact deflation can and has occurred. Japan, for example, has experienced prolonged deflation and continues to face it today. So under your hypothesis, banks shouldn't exist in Japan because they are a place we put money to prevent it from losing value.

You also seem to be confused by monetary supply and its relationship to inflation and deflation. Just because a supply is fixed doesn't mean inflation and deflation don't happen. Look at price stability when we were under the gold standard[1]. Under your assumption we shouldn't worry about price volatility, except we experienced worse shocks while under the gold standard than without it. Inflation and deflation aren't inextricably linked to monetary supply. People play a large role, you can print infinite money but if people are afraid to spend it, you still won't experience inflation.

On a side note, it continues to amuse me to watch Bitcoin and the people who are passionate about them rediscover all the things banking discovered over the past few thousand of years. The ideas are hardly new and have been tried, yet the results are ignored.

[1] http://www.theatlantic.com/business/archive/2012/08/why-the-...

I should say, I didn't realize Bitcoin even has a "manifesto." The only things I know about Bitcoin come from studying it as part of my job: I'm developing an MMO, so I'm interested in the economics of virtual currencies. MMOs by-and-large have fiat, non-scarce virtual currencies (money just gets "spawned" from the aether in response to certain things, with no matching debt on any balance sheet) which is a bit of a mess. Bitcoin is a scarce (eventually-fixed) "natural resource" virtual currency, which provides interesting contrasts.

Now, anyway:

I think we fundamentally agree here--we're just using different words. You're saying you put money in a bank to "secure" it--secure it from what? Losing value. Cash under your mattress loses value from inflation. Stocks lose value from investors losing confidence in them. Your wallet loses value when you get mugged and the dollars are taken out of it. (An encrypted digital wallet is somewhat resistant to this.)

And how do banks secure you from loss, compared to all those other things? Besides being big thick concrete buildings with guards, they mainly lend your money out to other "safe bets" to earn "enough" interest to offset your inflationary losses. Note, I didn't say they put you in the black; they just offset your loss compared to what it would be under your mattress, while not notably increasing your risk.

During the 2007 banking crisis, people were buying US treasury bills that offered negative interest. Why? Because a small known loss was considered to be less risky than the possible loss from anything the rest of the market was offering. People using Japanese banks are currently operating under the same principle: they would rather put their money in the place it will lose the least value.

Another way to say this is: savings investment is a minimax algorithm ("minimize maximum loss.") In a thriving economy, you can minimize maximum loss with a positive net return. In a bad economy, it will sometimes require a negative net return. Either way, integrating over the probability distribution will put you in a future where you end up with the most money, compared to all your other selves who made riskier bets with higher returns, or less risky bets with lower returns.

Now, in turn, the whole economic theory on the necessity of inflation is that it moves the minimax risk-optimum for perfectly-rational actors from "hoard" to "invest in very slightly risky ventures"; and the whole reason deflation is so scary is that it moves the minimax risk-optimum for perfectly-rational actors from "invest even when it's a sure thing" to "sit on it and let it appreciate."

Now, of course, humans on average aren't anywhere near "perfectly rational"--and in some cases we may create artificial situations where the risk-optimum is shifted this way or that. For example, corporations seek short-term (usually single-quarter) gains, to encourage stock growth. Short-term gains are more found in risky investments than stable ones; and being paid in bonuses rather than equity encourages "smart-looking-for-now" behavior that will let one earn their bonus and cash out, even as the company hits the risk head-on and sinks.

> People play a large role, you can print infinite money but if people are afraid to spend it, you still won't experience inflation.

Blah blah Keynes blah government stimulus blah blah. Not getting into that. :)

> Under your assumption we shouldn't worry about price volatility, except we experienced worse shocks while under the gold standard than without it.

No, quite the opposite--"much worse price volatility" is exactly the sort of thing I meant by "a global Bitcoin economy would be strange." No monetary policy means no quantitative easing, which is specifically deployed to decrease volatility.

Inflation and deflation, of course, would still occur--"money" is nothing more than the value of an liability on a balance sheet, measured in the unit of a particular currency; as we leverage the money we have as investments into other things, the economy has more IOUs and therefore more money, whether more physical currency is getting printed/minted or not. And when things get de-leveraged, that money goes away.

The thing that makes Bitcoin interesting is simply that, as a "natural resource" currency, the "base supply" of unleveraged money can't grow to meet demand. If everyone wanted to withdraw their leveraged BTC-united wealth at the same time into "actual Bitcoins", they simply wouldn't be able to.

If we still operated mostly with physical currency, this would indeed be similar to the horrors of the Gold-standard era, where if a country 'ran out of money', it couldn't just write down a deficit--it literally would have no tokens of currency to send abroad to receive goods in trade, and its people would starve simply for want of some gold in a drawer in a bank somewhere.

As far as I can tell, Bitcoin proponents just counter this by saying that we don't operate mostly in physical currency--so we could indeed transfer a trillion BTC to Cyprus, or so forth, even though a trillion BTC don't "exist." It would simply be a new asset on our balance sheet, and a new liability on theirs. The only thing that would change is that the unit was BTC instead of USD.


Still, that's a bit silly. Every day, we have more people using more USD for more things (this is what a growing GDP means, basically.) Having a fixed supply of USD, even as we have a growing number of people wanting to use it as a token of trade, would be very annoying. There's nothing that would make BTC different in that regard. (The proponents will say that "well, you can subdivide BTC to eight decimal places"--but even then, if I have an IOU saying "1 trillion BTC", subdividing physical BTCs won't get me any closer to being able to "instantiate" that trillion BTC in the real world. And if I can't do that, I can't take the BTC IOU your government sent my government and actually spend it on anything. So we're back to the starving-for-want-of-gold-in-a-drawer problem.)

If you can't tell, I don't actually think running the global economy in BTC is a particularly good idea. In fact, I don't think using Bitcoin as a currency is a particularly good idea. Bitcoin's ideal place in the economy, in my view, would be as a permanent, synthetic "commodity" to be traded on the commodities market--basically, a replacement for what people currently use gold for, but with an absolutely fixed supply.

In that role, Bitcoin-the-traded-commodity would still be able to serve its current function--basically, something you turn money in one currency into, to give to someone else in complete anonymity, who then turns the BTC back into money in their preferred currency. (You can also do this with gold, obviously. Bitcoin, then, is just "a strange precious metal that weighs next to nothing, takes up next to no space, and is easy to send to someone by typing it into a computer through a keyboard.")

But commodity-traded Bitcoin could also serve as a good unit to normalize prices against, rather than just measuring them in USD as we do now. You could value currencies in BTC, value stocks, value stock markets--even value products at the supermarket. It would basically be a global version of the Brazilian Real concept--setting prices stable with respect to the inflation or deflation of any given currency. (The store shelf would say "3.00 BTC", and then they'd have a "current exchange rate of BTC to USD" posted--or it'd all be figured out by our ubiquitous smartphone gizmos. Admittedly, going this far is a bit of a hassle if your country isn't experiencing hyperinflation, but it does work everywhere, and that feels sort of elegant to me in the same way a nice, concise algorithm does.)

This "absolute measure" could also make people take notice of the competitive devaluation spiral that the USD and the RMB have gotten into recently. :)

I might try this in my MMO, actually. Set up a fiat "fixed-supply" commodity and then normalize prices in units of it, even though you're paying for things with non-fixed-supply currencies.

Are you doing an MMO? I'm interested. May I write you an email?

Sure, go ahead. Specifically, it's a "cloud collaboration environment" that happens to have a virtual-world component... which, since it's gamified, highly resembles an MMO. :)

"A bank counteracts this by loaning out the money we give it (earning it money on interest), and then paying us another, smaller interest rate for our deposits in turn, which will offset inflation to whatever degree."

That's only true if your money is an interest-bearing account. Most consumer accounts are not.

Chequing accounts (non-interest-bearing accounts, used primarily for their other conveniences) are an instance of a bank providing a (traditionally) not-bank service.

Basically, chequing accounts (and all their features: cheques, wire transfers, EFTs, cross-bank ATM withdrawal, etc.) are forms of remittance: a service where a group of people get together and agree to maintain an 'eventually-consistent' balance-sheet between them. Alice goes to one member branch of the remittance group and gives them $N (plus a transfer fee $F) to send to Bob, who may be anywhere else. Bob goes to a different member branch and gets his $N. $N is transferred from the pool to the branch Bob went to to cover their loss, and then $F is split between the group.

Remittance has never really been a function you would expect a "bank" to provide until quite modern times; banks tended to be single-branch, holding the deposits of the people who put them in that bank. You could get someone else's deposits from a bank if they had them turned into a bank note and gave that note to you, but to withdraw it, you'd have to go to that bank. (Greenbacks--federal bank-notes--were a clear innovation from this system. Imagine, a system so bad for holding and transferring value that "cash" is an improvement!)

When a bank temporarily ran out money to cover its outstanding liabilities (withdrawals), it didn't ask to be paid from some pool--it just took out a loan with a neighboring bank. (This still happens, and it's the basis of one of the very important numbers in Macroeconomics: LIBOR--the London Inter-Bank Exchange Rate, which measures the average interest banks will ask for when giving out those bank-to-bank loans, and which is built into the base of pretty much any other loan interest rate you might look at.)

Eventually, though, wire transfers plugged banks directly into one-another's balance sheets in a way they weren't before, and banks could suddenly outcompete all the traditional remittance providers because, unlike the remittance providers, they already had pretty much the whole population of each city/town they served as members. It's like Google suddenly realizing they could do ads when they already had so many eyeballs specifically looking for things to purchase online: it went from "fun idea" to "main money-maker" in the span of a few years.

But that still doesn't mean that that's what it means to be a bank, or that Bitcoin "banks" make any sense. Bitcoin remittance providers, sure--but nobody ever figured it was a good idea to keep their savings with a remittance provider ;)

It's also discounting fractional reserve banking. Banks loan out many times the money you give it. These days 10 time more loans than capital is considered good, 100 times is the practical maximum you see (except in problematic cases, Greece Spain and the like).

That's why most loans specify that you can't withdraw the money into cash. Even 1% of people doing that would be a "bank run" and bankrupt the bank.

"Fractional reserve banking" with a 10% reserve does not mean that if depositors deposit $1M, the bank then lends out $10M. It means that if depositors deposit $1M, the bank retains $90,910 as a reserve and lends out $909,090. That's how the bank "loans out ten times the money it has".

Note that where before we had $1M of "money", now we have $1.91M of "money": the actual money provided to the borrowers, plus the on-demand deposits of the depositors. But the borrowers will probably deposit the borrowed $909,090 in their own bank, which can then lend 90% of it out again. If this procedure is carried out to the limit, you do eventually have 11 times as much "money" floating around the system as the "original" deposit, so the banks in aggregate have loaned out ten times the money originally deposited.

What is this about "most loans"? Generally when I've taken out a loan, the loaned money has been spent in something equivalent to cash rather quickly — generally in the form of a transfer to another bank via cashier's check, but that's equivalent from the point of view of the bank!

Just because Cypress is going to shit doesn't mean that moving your money into BTC is an awesome idea.

If your money is in Cypriot banks it's already too late, but it turns out in retrospect that it would have been an awesome idea a couple of weeks ago. Arguably nobody could have known that.

It was fairly clear months ago that there would be depositor losses. The small amount of capital flight was surprising.

I don't think it was clear at all.

1) 18 months ago, banks in Cyprus passed EU bank stress tests.

2) The EU has a deposit guarantee.

3) The new Prime Minister was elected because he promised deposits would never be touched.

4) Other countries received bail-outs without affecting deposit holders.

Given the above, I think it would be quite reasonable for an ordinary Cypriot to put faith in the EU and their elected government, and just get on with their lives.

My understanding is that the EU itself does it guarantee bank deposits but rather it requires members states to have bank guarantee schemes.

If it was obvious, why didn't that spark a run on the banks? Why did people seem to think their deposits were safe?

I agree that they should have been more vocal on this issue, cause information vacuum gives way to posts like this and surely it doesn't do them good PR-wise.

As for Cyprus, given how volatile and wild the bitcoin ecosystem is, I only tend to somewhat trust Mt.Gox and I view the rest as potential frauds (even if YC-backed).

MTGOX is the most trustworthy and secure bitcoin service out there. I still wouldn't put a large amount of bitcoin through it all in one go.

I trust BitStamp, they are people only few KM away from me, that's why.

Not sure if my story syncs up with what everyone else is seeing: -I purchased 10 coins on the 14th. -Money came out of my account on the 18th. -They said they were available to me on the 20th via e-mail -Have tried multiple times to send money to external wallets with no success -My account balance went from 10 to 0 to 10 -Support has been horrible

> -My account balance went from 10 to 0 to 10

That could potentially indicate a database infrastructure problem. Eventually consistent databases can issue responses that appear to travel backwards in time. And [1] says this:

  Coinbase uses MongoDB for their primary datastore for 
  their web app, api requests, etc. Coinbase is a
  decentralized, digital currency that is changing 
  the world of payments.
[1] http://www.mongodb.org/about/production-deployments/

As much as I love MongoDB it has way too many issues to use it as a primary data store for financial transactions. I hope they backed up and tested their backup recovery. Something tells me they're dealing with a data corruption/loss which wiped out their master and slaves without a backup. Perhaps if they've got decent logging they can piece it together with logs.

I barely trust MongoDB with my personal projects. It's shot me in the foot enough given they're not a very stable vendor (case in point, see the 2.4.0 replication bug -- we didn't get hit by that thankfully).

We've had issues where databases can get on divergent paths, then MongoDB will keep up to 300mb of the stuff it can't match in a directory and after that you're hosed.

It's absolutely insane if they are using Mongo as their source of truth (and not say some kind of caching layer). If there is one thing that should be ACID, it's financial transactions.

I wish I would have seen that they use MongoDB before using the site.

My account has data inconsistency issues. They are letting me double-sell coins, which makes me wonder if the first sale went through (at $70). Also, I have experienced up to 48 hours delay in sending BTC transactions out from my coinbase wallet. These sound like Mongo problems and they wouldn't be the first to have their Mongo databases fail under load. I am making screenshots of my major transactions to ensure that they are not lost. Hopefully they have the logs to get everything in the correct state eventually.

But it does not appear to be used for the financial transaction component, so its use should not be able to cause inconsistencies in account balances, etc.

For a moment there, it seemed we were witnessing what http://www.mongodb-is-web-scale.com/ had prophesied:

"Now I've contracted hemorragic e-coli from cleaning cow stalls and I'm bleeding out my asshole. I'll be dead soon, but that is a welcome relief. I will never have to witness the collapse of the world economy because NoSQL radicals talked financial institutions into abandoning perfectly good datastores because they didn't support distributed fucking map/reduce."

Thanks for posting this. It inspired me to figure out how to get my BitCoins out of Coinbase and into my own wallet.

I've used MongoDB enough to know that I don't want my money to be held by MongoDB.

I've had some coins in my Coinbase account since last month. Two days ago I tried to transfer from an external wallet, and its still pending.

So that can't be something with the coins just not being bought yet.

It is also worth noting that I had a very similar problem when I bought my first 10BTC in February. This is strike two...a very loooong strike 2.

It's possible that they've been undercharging for their service, and as a result have simply run out of cash. With the recent price growth, their buy price sometimes fails to catch up with the current exchanges rates, resulting in losses for them that their fee of 1% does not cover for.

My friends trying Coinbase have raised concerns about the long delays as well, and I have a bitcoin transfer to my personal wallet that's been pending for multiple days. This needs to be resolved quickly to keep Coinbase and Bitcoins reputation.

...their buy price sometimes fails to catch up with the current exchanges rates...

This is an existential flaw in their business. Why don't they just reject transactions at expired prices? (If they wanted to be slightly more evil, they could do this in one direction only.)

Or just raise more money hoping that the price of a bitcoin will stabilize in the near future. Their current system is very convenient for users.

I wouldn't characterize the experiences of the customers on this thread as "convenient". If a commodity-trading system works except in cases of 2-sigma volatility, then the system doesn't work.

I'm just responding to metaverse's reasonable hypothesis here. Coinbase ought to diminish speculation by providing information, unless there are legal reasons for them not to do so.

>Or just raise more money hoping that the price of a bitcoin will stabilize in the near future.

Using a business model entirely dependent on the best case scenario would not be wisest play they could make. Even if BTC did stabilize, we now know market prices like this are not guassian but fractal/power-law based. Infrequent but sudden unexpected extreme volatility is a natural characteristic of such systems.

A better idea would be to develop a business model that at least expects that and does not fail when it happens, or at best exploits it.

>This needs to be resolved quickly to keep Coinbase and Bitcoins reputation.

Bitcoin's reputation has survived much worse. Mt.Gox hacking, Bitcoinica hacking, and several others. Bitcoin has intrinsic value independent of the private company infrastructure that springs up around it, no matter the foibles of the latter.

Coinbase's reputation on the other hand, is another matter.

I don't think that exchange rates/fees is it. I've had some purchased coins in my coinbase account for over a month. Tried two days ago to transfer to an external wallet. Still pending. That shouldn't have to go through any cost really to transfer it right?

Seems unlikely. From their blog yesterday:

  This is probably as good a time as any to mention 
  that if you are in SF and are an awesome software 
  engineer, we’re hiring: https://coinbase.com/jobs
Companies that are running out of cash tend not to hang big, "we're hiring" signs in the window.

Companies that want to give the impression that they are thriving also hang "we're hiring" signs.

This will affect the response they get from "awesome software engineers in SF", even if they are actually thriving.

If they're letting you "lock in" a buy price and then waiting for the incoming funds transfer to settle up, then they must be floating funds somehow, right? It might also explain the whole "we can only sell so many Bitcoins in a 24 hour window" thing.

I'm wondering if this has bitten them really hard during the runup.

IIRC, Coinbase has a founder and an engineer, which doesn't excuse non-responsiveness, but is probably the reason. They're probably hard at work trying to deal with this problem, and haven't prioritized support or notification of affected customers. That might have been a good choice if the fix only took a few hours, but as it's dragging on a bit, it's probably better to take some time out from fixing it and communicate with customers.

I hope they figure this out soon. This is the kind of thing that scares me and the primary reason that I decided against speculating in bitcoins. For someone like me who can't really afford to lose a lot of money, I need to trade in historically stable stuff (even if they are as rigged as they are..).

I don't really understand bitcoin very well, that is reason #2. I hope the Coinbase folks though have a solid grasp of it and can fix this otherwise this is going to look very bad.

If you can't afford to lose your investment, you shouldn't be investing at all.

Scared money is essentially lost money if you can't make rational decisions without being influenced by fear.

As for #2, that can be solved through self education. Why use an investment vehicle that you don't understand?

>If you can't afford to lose your investment, you shouldn't be investing at all.

While I generally agree with that statement, it's a bit of a red herring in this context. That is, it typically applies to the notion of risk in the investment itself, not the risk that the intermediary or exchange will simply "misplace" your investment or your cash.

If you can't afford to lose your investment, you shouldn't be investing at all.

I doubt they would have let Madoff use this excuse.

I'm not saying these dudes are anything like that jackhole, but rather that there is a difference between the risks inherent in the security or commodity (in this case bitcoin) and the counter-party risk of your broker screwing up the bookkeeping. Coinbase have made the latter risk appear significant.

Madoff is a straw man; he committed fraud.

If you said this was a poor example, I would at least understand what you're trying to say, but how on earth is Madoff a straw man in this instance? Try to to separate your [legitimately] dim view of Madoff from the fashion in which his example illustrates the phenomenon of counter-party risk.

He was disruptive :)

You might want to reconsider making uncompromising italicized statements about investing until you're more familiar common industry practices like pension funds and 401ks.

I'm a Coinbase customer, and as an additional data point, their customer service has been wonderful. Now granted, this was about a month ago. I did send them an email on Thursday and haven't heard back from them, but my request wasn't urgent, so I haven't thought much of it.

Overall, I'm rooting for them, and being YC backed, I'm confident that they'll figure out their issues. I do hope sooner rather than later, as I can't wait to use their API.

Sure, we're all rooting for them. But a mod just deleted the "YC ('12)" off the headline. What should I think about that?

Must mean that we're trying to hide the fact that we funded them, right? It could only mean that.

It's a very relevant fact (after all, this is a YC site and Coinbase is a YC company) that was explicitly removed by a moderator, and the action feels like dissociation. Can you present a better explanation?

That convention is for company names that appear in headlines of stories.

HN is a news site, not a customer support forum for companies funded by YC, and in fact the site guidelines explicitly ask that it not be used that way:


Strictly speaking I should have killed the post entirely, but that would just have inflamed conspiracy theorists further.

I'm happy the post achieved it's intended effect, which was to get someone at Coinbase to respond. So yeah, I'll be the first to admit that I abused the HN post by turning it into a defacto customer service request instead of something newsworthy.

But, on the other hand, this is somewhat newsworthy. You have a company trying to start up in a very tough space where you need to be super-reliable and super-transparent. Coinbase's actions this entire week were neither. Let me repeat that important middle part. An entire week. This is not an "OMG my transaction took a day instead of an hour!" for one or two people.

It's not like I was posting a customer service request for myself. Look at twitter and you'll see a lot of people with troubles greater than mine.

Perhaps I should have prompted some Bitcoin-related blogger to write a nasty post and then link to it? Would that have turned the post into a "news" one and passed the gate?

"Perhaps I should have prompted some Bitcoin-related blogger to write a nasty post and then link to it? Would that have turned the post into a "news" one and passed the gate?"

As per PG's guidelines, that is the only compliant way. If I were him I'd much rather have the conversation on HN than to have the blogosphere or financial media light up over a controversy.

"That convention is for company names that appear in headlines of stories."

The guidelines state: "In titles, please don't describe things by their relation to YC unless they're actually associated with YC."

AFAICT Coinbase is associated with YC, so the appearance makes perfect sense.

"Strictly speaking I should have killed the post entirely"

The real question is why it took an HN post that reached the frontpage to see any sort of response from coinbase. If you read the comments and the original assertion "because nobody trying to trade with Coinbase can get a public answer", it seems like people have tried other means and couldn't reach anyone at Coinbase.

This is a lesson in how intellectual dishonesty works. You quote the HN guidelines, and you quote PG's reference to them ("strictly speaking...") but you omit the guideline to which he was obviously referring:

please don't use HN posts to ask YC-funded companies questions that you could ask by emailing them.

Instead you change the subject with "The real question is..." when, in fact, that wasn't the question. The question was about title changes. No doubt a dozen more "real questions" are waiting in the wings.

There's no way PG can win this game of whack-a-troll. I'm surprised both that he even tries and that he doesn't snap more often.

[Edit: deleted a dumb and superfluous bit here.]

Frankly, I think a firehose of ridicule is the last thing this site needs, and I'm sad when I see it upvoted.

I'm inclined to engage in that kind of interaction myself, having learned somewhere along the way that it's what a certain kind of intelligent person does. So I thought it was something to emulate. But I've been re-examining that assumption, largely in reaction to conversations I've seen on HN. I try not to engage in rapid back-and-forth threads that go more than a couple of posts deep. And I try to keep snark at a minimum. Sometimes I fail, but when I do I feel guilty about it, like I'm dragging the site down. I do not feel like I'm accomplishing something with it.

On the other hand, I feel free to be snarky on Reddit since that site is hopeless anyway. :-)

We often see laments about the declining quality of conversation on this site, and I believe such rapid-fire exchanges from leaders in the community are a contributing factor there. It sets a bad tone.

You're right, and I'm wrong. I'm going to edit that.

I know what you mean about trying and failing. 95% of the time I resist the impulse to make comments like this. Most of the other 5% I go back and delete it.

Thanks for the surprisingly thoughtful comment.

"Instead you sneakily change the subject with "The real question is..." when, actually, that wasn't the question."

You didn't read the parent posts, did you? You should review the conversation. The entire issue at hand is the fact that the title was changed. To summarize:

joezydeco: a mod just deleted the "YC ('12)" off the headline https://news.ycombinator.com/item?id=5428387

pg: Must mean that we're trying to hide the fact that we funded them, right? It could only mean that. https://news.ycombinator.com/item?id=5428426

niggler: It's a very relevant fact (after all, this is a YC site and Coinbase is a YC company) that was explicitly removed by a moderator. https://news.ycombinator.com/item?id=5428449

In that context, what's being discussed is the renaming, for which PG replies by saying "That convention is for company names that appear in headlines of stories." and pointing to the news guidelines. The rest of the post is a non-sequitur.

I replied by pointing to the only part of the guidelines that discuss titles.

Now you tell me who is being intellectually dishonest :)

Yes, the subject was title changes. That's why your comment, "The real question is why it took an HN post that reached the frontpage to see any sort of response from coinbase" was a change of subject. My point is that such an ammunition-refill reveals underlying intent.

You are accusing me of intellectual dishonesty which started from PG not addressing the question of title changes.

The only statement he made on that point is:

"That convention is for company names that appear in headlines of stories."

And in pointing to the guidelines, there is something that is relevant to the titles: "In titles, please don't describe things by their relation to YC unless they're actually associated with YC."

So he didn't give a response that explained why the title was changed. He thinks the issue is between "killing the story" and "renaming the title". But if he thinks that killing the story is a way to respond, that suggests he doesn't appreciate the severity of the situation.

I've seen a similar situation before with much more money (15M) so I know how frustrating it is to wonder if you will ever get your money back and to plan for lawsuits. In my case, it took complaints to SEC to get them to finally return the money. You may think this is a trivial issue, but it's very hard to re-establish trust once it is lost.

Back on point, I don't think PG appreciates the severity of the issue at hand.

On reflection, I don't have enough information to know that you were being intellectually dishonest. Other explanations are possible. So I'm sorry I said that.

Remember folks, mentioning the YC association is only relevant in the title if it's positive news.

I think when Paul Graham makes fun of you for suggesting the disassociation you have your answer.

His answer can actually mean anything.

Indeed, perhaps he just likes marshmallows.

What the parent meant was:

"Must mean that we're trying to hide the fact that we funded them, right? It could only mean that."

Could be

A) sarcastic cover while distracting readers from the fact that there's no good reason (trying to get others to appeal to authority)

B) there's a real reason which is sufficiently obvious that someone jumping to conspiracy is off-kilter

If (B) were the situation, the "real reason" isn't obvious to me or to the parent (and I suspect you don't find it obvious either)

Hm. That is compelling logic. But, since you're right, that means YC is also distancing itself from Dropbox. And Airbnb. Holy, the whole thing is unraveling!

Please point to an example of a criticism of AirBnB or of Dropbox in which the submission title originally had (YC '*) in it and was edited to remove the YC association. I and many other would like to see it.

"Many others would like to see it". It is the question of our times.

The question of our times, by the way, is answerable with the search box at the bottom of the page.

Really? HN Search reveals the history of a link's title? That doesn't come up for me.

tptacek has proven himself unable to reply without snark in this thread. I decided not to challenge the point

I think this is true, and that I have lost my ability to take this subthread seriously.

But for the record, just go look for all the stories about YC companies that aren't labelled with "YCxxx".

No, actually removing context from headlines, reverting them to original titles, or even completely changing the link target is a long-standing tradition on HN. It's not reserved for YC-related news. And it has been happening more often lately. Is that a policy now?

It's not a big hurdle or anything but does take away a bit from the convenience of scanning new content. Those editorialized titles often contain the reason why a submission is relevant, or, like here, what is the "claim to fame" of participants... that's one of the benefits of having humans post those links.

When did coinbase join YC? Was it S12 or W12?

(YC XX) is generally only used on HN for launch and funding announcements.

Coinbase (YC S12) hires first engineer http://news.ycombinator.com/item?id=5011361

Is that a launch or funding announcement?

Those are all launch-like announcements. Is that what you were trying to show.

All these are different from a random person tossing in a "what's the problem with [x]?"

Oh, definitely. Those are all positive news about a YC company. That's why it's totally kosher and no moderator would ever dream of stripping off the association.

This article, in contrast, is about a company potentially looting users' bitcoins due a mysteriously long response time and users being unable to withdraw. Obviously mentioning the YC connection is completely inappropriate. We need to remember here, that this site is solely for the celebration of YC companies, not to point out that YC potentially funded a bad apple that's screwing it's customers.

Please, use the YC association correctly.

My mistake. Thanks for the correction. (And my apologies, pg)

This makes it pretty worthless: "Sorry, the maximum number of purchases on Coinbase has been reached for today"

Sounds like they got outside of their reserves in the BTC run-up this month.

I'm rooting for them, but they definitely need to communicate more.

Am rooting for them too - they are in beta folks, that's quite an honest communication on its own.

This is ridiculous. If they are trading real money, they are not "in beta".

Sure, that's an honest communication, but apparently not completely honest because their systems are still down.

Prior to that message, this was the only tweet from @Coinbase for the entire day:


Not exactly confidence-inspiring.

"Beta": why didn't AIG think of that?

Their lack of transparency is not a new problem.

I had a problem with their API and it took days for them to even acknowledge that I had even emailed them about it.

I doubt they will be around for much longer.

When it comes to money, customer service must be the first priority even if it is to say "sorry".

That's too bad, I had actually set aside today to learn their API and integrate it into a project . . . nevermind.

On a related note, check out the insane price action on the exchange rate overnight.

I would give them six months to migrate off of mongodb first.

I've had a pending payment transaction to a couple places for about a week now. :( Still waiting....

I tried to exchange for 10 coins a while back and they said somehow my bank didn't approve of the ACH... that was when it was like $21 to 1 btcn.

Perhaps they were running the client that got rolled back and got screwed on a big double spend. Pure speculation but that did happen recently.

I thought the transactions were migrated over successfully?

I wonder if part of the current price drop is lack of transactions from coinbase

They are actively hiring for customer support if anybody wants to tackle the job of improving this situation: https://coinbase.com/jobs

I know it's real money and people flip out but try to be understanding of their situation. Their business is exploding and they're moving 1,000 miles an hour in an industry that is literally being invented as we speak. Hiccups should be expected.

Strange indeed...I've never used Coinbase, but I had heard good things about them before. Hopefully they can resolve this issue in a timely manner.

Wait a minute. Y Combinator funded a fucking BitCoin startup?

f is Fonz/YCombinator, w* is water, and S is a fucking vicious shark.

Frame 1 (before funding a BitCoin startup):

Frame 2 (decision to fund a BitCoin startup):


Frame 3 (after funding a BitCoin startup):


How does that attempt at snark even make sense? In frame 1, before YC funds a Bitcoin startup, the Fonz is already on a trajectory that requires him to jump over a shark.

Try harder next time, nascent evil 'edw519.

I'm cynical, not evil.

I like what Paul Graham is trying to do, and I don't actually think one obvious bad call constitutes "jumping the shark". If terrible, stupid decisions constitute shark-jumping, then I shouldn't have any limbs left.

However, I strongly dislike Bitcoin (obvious scam) and don't know why YC would gamble its reputation in such a degenerate way as to associate with it. Also, I felt the world could use some crude ASCII art.

PG already answered your exact criticism [1]. He's playing the extreme long tail "black swan" odds.

"I don't know what fraction of them currently raise more after Demo Day. I deliberately avoid calculating that number, because if you start measuring something you start optimizing it, and I know it's the wrong thing to optimize. [5] But the percentage is certainly way over 30%. And frankly the thought of a 30% success rate at fundraising makes my stomach clench. A Demo Day where only 30% of the startups were fundable would be a shambles. Everyone would agree that YC had jumped the shark. We ourselves would feel that YC had jumped the shark. And yet we'd all be wrong."

[1]: http://paulgraham.com/swan.html

Good-faith business failure is fine. It's excellent, insofar as it's a byproduct of something very good: taking risks in a world of convex payoff.

Associating with a Bitcoin startup is a different story. Bitcoin is a sleazy scam designed to enrich people who got in early and sold at the top.

It's not a problem of making a call that fails. That's going to happen in this business. It's the taste issue. Unless they were something else in their YC application and became a Bitcoin startup, they should have known better.

>Bitcoin is a sleazy scam designed to enrich people who got in early and sold at the top.

That's quite an accusation. Is there some smoking gun evidence we should all be aware of?

Let's assume for a minute you're right, and it is a sleazy scam. How do you see it playing out and ultimately

Disclaimer: I think it's certainly possible, but not a certainty.

Let's count all the ways 'michaelochurch is being fatuous here:

* Even if you agree with him that Bitcoin is a scam, as I do, YC does not necessarily agree

* Similarly, Coinbase doesn't have to agree with us, in which case they're also not willfully furthering a scam

* None of his points have anything to do with the thread, which isn't about intrinsic problems with Bitcoin but instead stability problems at Coinbase.

Fwiw I'm genuinely curious how people who are convinced BTC is a scam see it playing out. Generally, once a scam is exposed, it collapses, so what does that look like with bitcoin? But if that's too OT, I'll save it for another thread.

Early entrants in the market extract profits, leave the "currency" to deflate back to Flooz valuations. At a certain point in the life cycle of things like BTC, trading takes on a life of its own. I'm sure tulip traders could have given you an impassioned defense on the intrinsic long-term value of tulip bulbs during that bubble, too.

Wait, what? Is the Fonz heading towards the shark or not, Michael? I and many others demand to know.

I don't like that YC blessed a Bitcoin startup either, but I like fatuous snark even less.

I like YC. VC-istan would be far more degenerate without the influence of Paul Graham. However, they're not infallible.

Ridicule (what you called "fatuous snark") is a social immune system that sees degeneracy (e.g. funding Bitcoin) and says, "Stop doing that". It has a function.

He wasn't critiquing snarky jokes[1], he was critiquing the fact that your snarky joke was badly constructed and didn't correctly cut to the point you were trying to make. Which means your snark, instead of reading as funny and biting, read as trite and less relevant.

[1] I mean, clearly not, he snarks all the time: https://news.ycombinator.com/item?id=5428558

Maybe I need to take a break, lest my snark jump the-- no, that's too obvious.

My point was, "If Y Combinator is actually funding Bitcoin startups, they're dipping into the taint-bottom of the barrel and need to take stock." I thought that some Ascii art might lighten the mood surrounding cultural calamity. Funding good-faith business failures is inevitable and fine-- it's an unpredictable game-- but funding Bitcoin is an obvious sign of a decision not given enough time.

Of course, he and you are right that the shark-jumping metaphor is clumsy if we're looking for exact correspondence. Incubators work in parallel and a single bad decision is macroscopically inconsequential. It's not like a sequential narrative (from which the shark-jump motif comes) where one bad segment can set the whole thing off. I didn't actually mean that this suggests terminal decline, only that YC miiiiight want to be more thoughtful/selective if it's actually at the point of funding Bitcoin startups.

Anyway, I'm off to go create a currency out of mediocre Internet humor. It's called BitClown. Anyone want in? 0.1% equity, unlimited vacation, free beer and abundant bad jokes.

Cynical, not very open minded.

Bitcoin is not an "obvious scam" any more than the world is obviously flat, or fiat currencies were obviously going to fail. Remember going off the gold standard? Probably not, but lots of people considered it an "obvious scam." Perhaps it is, but it certainly has been a long game.

While early adopters surely have made an enormous profit, it is not a scam, and has a significant chance of being a major player in the world economy.

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